the settlement proceeds by wire into our trust account. Recall, we had previously provided wiring instructions to the“ client” so they could wire in the retainer. My spidey senses tingled. In my head, I thought, too quick, too easy. Meanwhile, the rest of the day passed. I was waiting to see what would happen on Monday. Credit to the sophistication of the fraudsters – they did not inquire for their money first thing Monday morning. But, around lunch, they sent a fairly innocuous, routine, email asking when and how we would disburse the settlement proceeds. Candidly, the timing and tone of the email, as was likely intended, reduced anxiety about a problem. Still, I was concerned, and so I directed Associate to advise the“ client” that I was out of the office( true) and that we would let the funds ripen and get back to them in a day or two. The“ client” agreed. Again, reassuring.
Meanwhile, I asked Associate to look around on the internet for a similar scheme, if there was one. I also called our contact at the bank.
The bank’ s response was disturbing and inaccurate. I explained what had happened, confirmed that the settlement proceeds($ 2 million) were in our account, and asked for thoughts. The banker informed that: 1. after 24 hours, no one could recall the money from our trust account without our permission( wrong); and 2. that all seemed in order on their end and they would await our instructions.
I called the State Bar. I received assurances that my caution was appropriate and that I should continue to investigate until I could get some comfort.
Then, Associate informed me that she had, in fact, found an article on the web about a lawyer who had been the victim of the same scheme. Literally, the same names. WOW! Now what? I had $ 2 million in my trust account from this transaction. I was not releasing that money to anyone until I was sure I was safe.
We again, engaged with the bank. This time, we asked for information about the course of the funds. What happened next was interesting.
The wire we received, originated with a bank in Baltimore, MD. The sender was a small Baltimore real estate law firm. I called the named partner in the small firm and asked about the wire. I think the poor lawyer almost cried. She was closing a real estate transaction for a known client. The buyer wired purchase money to the firm. The fraudsters hacked the firm’ s email, intercepted the emails about the wires, and sent fake wire instructions to the Baltimore firm. The fake instructions were wire instructions for our firm trust account. So, the Baltimore firm received new instructions just before the closing and sent the money to us instead of to the Seller. The Seller complained that it did not receive the money and the closing lawyer
IN THE PROFESSION
was out $ 2 million. I explained that it appeared I had her money and all would be okay.
Not surprisingly, the Baltimore firm had already involved the FBI. We remained cautious about sending the money to make sure that the Baltimore firm was not also part of the scheme. Meanwhile, the Baltimore firm contacted the FBI. Remember the bank had informed us that no one could get the money out of our trust account without our permission. As I said, above, that information was false. While we were completing our investigation, the FBI was able to withdraw the money from our account and return it to the Baltimore firm without our knowledge or permission. The money simply disappeared.
So, glad for my spidey senses and happy endings all around. The closing firm retrieved the money and completed the closing. We were relieved of the need to make a decision about dispersing the money so we did not have to worry about the“ client” or anyone else accusing us of doing anything wrong. And, I get to tell you this story and warn you from falling victim to scary schemes.
You must admit, the two-part scheme, was clever. On the one hand, the fraudster intercepts the funds, often from a closing of some sort involving wired funds. The fraudster redirects those funds to part two of the scheme. In our case, we were informed that we were receiving settlement funds. Had we disbursed the funds to the“ client,” we would have been out $ 2 million when the Seller came calling for their money.
TAKE AWAYS: A Financial Fraud Kill Chain is an FBI tool that can stop a qualifying fraudulent wire if reported within 72 hours. Click here for more info re the kill chain
Pay attention to your spidey senses. Right out of college, I worked for the Atlanta office of Bear Stearns. Sam Shapiro headed up the office. He gave me my first job as an intern and then as a stockbroker at Bear Stearns. We had to get approval before submitting large orders. One day I went to Sam. I received an inbond call from someone I did not know. Big order. Would have been a nice commission for me. I went to Sam for approval. Sam said‘ no.” It went like this: Sam –“ You don’ t know this person, right?” Baby Lou Cohan –“ yes sir.”“ Your last name starts with the letter“ C,” yes?” Baby Lou Cohan –“ Yes sir.” Sam –“ How many brokers do you think this person called before getting to you?”
Lesson – It’ s hard to say no to money. If it feels wrong, say no. Almost every mistake you might make as a lawyer starts with failing to turn down a bad case or a bad deal. www. atlantabar. org THE ATLANTA LAWYER 13